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CASE NO.: Appeal (civil)  3696 of 2007

PETITIONER: Asian Thermal Insulation (I) P. Ltd

RESPONDENT: Bridge & Roof Co. (I) Ltd

DATE OF JUDGMENT: 13/08/2007

BENCH: Dr. ARIJIT PASAYAT,C.K. THAKKER & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T (Arising out of SLP (C) No. 49 of 2006)

Dr. ARIJIT PASAYAT, J.

1.      Leave granted.

2.      Controversy lies within a very narrow compass.       3.      The factual background as projected by the appellant is  as follows:         On 22.12.2003 work order was issued by the respondent  to the appellant. There was a clause for arbitration in the  agreement which was to the following effect:       \02341. ARBITRATION B&R confidently feel that there shall not  arise any disputes or differences during  execution and completion of this order by  the Contractor.

    However, in the event of any  disputes or differences arise between  Company (B&R) and Contractor  (hereinafter called the said parties)  touching or concerning the interpretation  of the terms and conditions as  performance of the order or in connection  therewith or the rights and liabilities of  either of the said parties hereto, the said  parties shall endeavour to settle the same  amicably through mutual agreement  between them, but if the mutual  settlement is not possible between the  Company and the Contractor, the  provisions of the Indian Arbitration &  Conciliation Act, 1996 and all statutory  re-enactment and modifications thereof  and the rules made thereunder shall  apply to such arbitrations.\024                 4.      On 27.11.2004 a notice of demand was sent to the site of  the respondent and it was returned with the postal  endorsement \023refused\024. On 30.6.2005 the request was  reiterated. On 9.8.2005 an order was passed by the High

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Court on the application filed by the respondent.  The matter  was directed to be placed before the Chief Justice of the High  Court for naming an arbitrator. On 19.9.2005 the High Court  refused to recall its order dated 9.8.2005 on the appellant\022s  petition. On 26.10.2005, this Court in SBP & Co. v. Patel  Engineering Ltd. & Anr. [2005 (8) SCC 618] has dealt with the  nature of power exercised by the Chief Justice of High Court  or Chief Justice of India, as the case may be, under the  Arbitration and Conciliation Act, 1996 (in short the  \021Arbitration Act\022) and held that same is a judicial power and  not an administrative power. The decision in Konkan Rly.  Corpn. Ltd. v. Rani Construction (P) Ltd. (2002 (2) SCC 388)  was overruled in SBP & Co. (supra). The conclusions per  majority were as follows:       \02347. We, therefore, sum up our conclusions as  follows:

(i)     The power exercised by the Chief Justice  of the High Court or the Chief Justice of  India under Section 11(6) of the Act is not  an administrative power. It is a judicial  power.

(ii)    The power under Section 11(6) of the Act,  in its entirety, could be delegated, by the  Chief Justice of the High Court only to  another Judge of that Court and by the  Chief Justice of India to another Judge of  the Supreme Court.

(iii)   In case of designation of a Judge of the  High Court or of the Supreme Court, the  power that is exercised by the designated  Judge would be that of the Chief Justice  as conferred by the statute.

(iv)  The Chief Justice or the designated Judge  will have the right to decide the  preliminary aspects as indicated in the  earlier part of this judgment. These will  be his own jurisdiction to entertain the  request, the existence of a valid  arbitration agreement, the existence or  otherwise of a live claim, the existence of  the condition for the exercise of his power  and on the qualifications of the arbitrator  or arbitrators. The Chief Justice or the  designated Judge would be entitled to  seek the opinion of an institution in the  matter of nominating an arbitrator  qualified in terms of Section 11(8) of the  Act if the need arises but the order  appointing the arbitrator could only be  that of the Chief Justice or the designated  Judge.   (v)     Designation of a District Judge as the  authority under Section 11(6) of the Act  by the Chief Justice of the High Court is  not warranted on the scheme of the Act.

(vi)    Once the matter reaches the Arbitral  Tribunal or the sole arbitrator, the High  Court would not interfere with the orders

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passed by the arbitrator or the Arbitral  Tribunal during the course of the  arbitration proceedings and the parties  could approach the Court only in terms of  Section 37 of the Act or in terms of  Section 34 of the Act.

(vii)   Since an order passed by the Chief  Justice of the High Court or by the  designated Judge of that Court is a  judicial order, an appeal will lie against  that order only under Article 136 of the  Constitution to the Supreme Court.          (viii)  There can be no appeal against an order  of the Chief Justice of India or a Judge of  the Supreme Court designated by him  while entertaining an application under  Section 11(6) of the Act.

(ix)  In a case where an Arbitral Tribunal has  been constituted by the parties without  having recourse to Section 11(6) of the  Act, the Arbitral Tribunal will have the  jurisdiction to decide all matters as  contemplated by Section 16 of the Act.

(x)  Since all were guided by the decision of  this Court in Konkan Rly. Corpn. Ltd. v.  Rani Construction (P) Ltd. and orders  under Section 11(6) of the Act have been  made based on the position adopted in  that decision, we clarify that  appointments of arbitrators or Arbitral  Tribunals thus far made, are to be  treated as valid, all objections being left  to be  decided under Section 16 of the  Act. As and from this date, the position  as adopted in this judgment will govern  even pending applications under Section  11(6) of the Act.

(xi)    Where District Judges had been  designated by the Chief Justice of the  High Court under Section 11(6) of the  Act, the appointment orders thus far  made by them will be treated as valid; but  applications if any pending before them  as on this date will stand transferred, to  be dealt with by the Chief Justice of the  High Court concerned or a Judge of that  Court designated by the Chief Justice.

(xii)  The decision in Konkan Rly. Corpn. Ltd.  v. Rani construction (P) Ltd. is overruled\024.             5.      Though arguments were advanced in support of the  respective stand about the legality of the impugned order, it  was agreed to by learned counsel for the parties that following  arrangement can be made.

\023The appellant has nominated one Sri J.

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Chawla to be its arbitrator. Within a period of  30 days the respondent shall nominate its  arbitrator.  Thereafter the Chief Justice of the  High Court shall nominate the Presiding  Arbitrator who shall be a retired Judge of any  High Court.\024       7.      Appeal is accordingly disposed of with no order as to  costs.